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E-commerce satisfaction hits near-record level

With Barnes & Noble and Amazon leading the way, customer satisfaction with e-commerce in the United States has reached near-record levels, according to American Customer Satisfaction Index survey results released Tuesday. Online businesses continue to satisfy consumer at a significantly higher rate than “offline” businesses and services, the survey found.

Using improved product images, side-by-side comparisons and forums allowing customers to write product reviews, online businesses have managed to provide an experience that rivals that of walking into a store and inspecting goods in person, says Larry Freed, president and CEO of ForeSee Results, who analyzed the e-commerce results for the ACSI. The round-the-clock availability of the Internet doesn’t hurt, either, he notes.

“What new information technology allows us to do is much better matching between buyers and sellers. It’s much easier for buyers to find appropriate sellers [and vice-versa],” says Professor Claes Fornell, director of the University of Michigan’s National Quality Research Center, which compiles and analyzes the ACSI data.

The ACSI surveys 80,000 customers of various companies and publishes consumer satisfaction rates based on a 100-point scale that represents the satisfaction level of an average customer, according to Fornell.

The e-commerce score in the fourth quarter of 2006 was 80.0, up from 79.6 the previous year and close to its highest score of 80.8, achieved in 2003. E-commerce in 2006 scored higher than all other service sectors measured by the ACSI, including offline retail, accommodation and food services, health care, cable television and phone service, utilities, and finance and insurance. E-commerce also outpaced e-business, which includes portals, search engines, and news and information sites.

The e-commerce category includes e-retail, online auctions, online brokerage and online travel companies. E-retail posted the highest customer satisfaction scores with Barnes & Noble (88) and Amazon (87) leading the way.

On average, Internet retail scored 5.1 points higher than general retail in 2000, and is now scoring 8.6 points higher, according to Freed.

“We are seeing that gap widen,” he says.

The e-retail scores probably will not grow much more, according to Freed. “It’s going to be tough for the online space to grow significantly because they’re at a very high level, they’re the highest performing right now.”

Although Amazon did not score as highly as Barnes & Noble, Amazon’s performance may be more impressive because it is selling many electronic products that tend to produce lower customer satisfaction rates than items such as books, researchers said.

“I thought they would face some difficulty moving from essentially a bookseller to somebody who sells a lot of different products,” Fornell says. “Amazon is still at this very high level of customer satisfaction. Not to diminish the accomplishments of Barnes & Noble, but they have a somewhat simpler task.”

customer satisfaction score of 80 is one point lower than the previous year but still makes it the clear leader in the online auction industry. Amazon’s customer satisfaction score easily exceeds eBay’s, though, likely because Amazon takes on more responsibility for transactions that are made between users, Freed says.

“That’s a big challenge for eBay going forward,” he says.

For all goods and services, both online and offline, customer satisfaction rose to an all-time high of 74.9 in the latest of ACSI’s surveys, which began in 1994. Consumer spending should continue to increase as a result, researchers say.

“Consumers are happy,” Fornell says. “When they’re happy they tend to spend more regardless of whether they have the income to support that spending. I’m not sure that’s good for the long term, but that’s what is happening.”

There was one piece of bad news in e-commerce: the satisfaction score for online travel fell to 76 from 77 the previous year.

“They’re lower than others in e-commerce and yet this is an area where the technology seems to be pretty well fitting,” Fornell says. “It should be very lucrative. They still haven’t found the right mix of things here. … We’ve been measuring them for five or six years. They’re actually lower now than when we first started measuring them and that is a little disturbing.”